From Judex Okoro, Calabar
Major stakeholders in oil and gas industry have advocated the involvement of microfinance banks in distribution of kerosene across the country.
The stakeholders said the involvement of microfinance banks would not only reduce scarcity of the product but act as a bridge between the supplier and the end user as well as ensure right pricing gets to consumers.
The stakeholders, who spoke while interacting with members of the House of Representatives Committee on Petroleum Resources (Downstream) at Calabar Free Trade Zone (CFTZ) over the weakened, decried the activities of middlemen in the industry and suggested that with intervention of microfinance banks, undue price would not be transferred from the depot to the end user by middlemen.
Expressing worry at the activities of middlemen in the industry in his CFTZ office in Calabar, the Managing Director of Fynefield Petroleum, Mr. Akshay Saxena, he said the cardinal point of the committee’s visit is to ensure the right price of kerosene gets to the consumer in quality and at cheaper rate.
Saxena explained that between the time of depots’ sales and distribution to the surface tanks owners, there are lots of price differentials, adding that most people who retail the product are mostly surface tanks owners who sometimes sell in large quantity more than fuel stations.
According to him, most retailers of kerosene are housewives, little business women and men who can sell between 5,000 and 10,000 litres but cannot stock up their tanks as they don’t have enough money to pay in bulk to suppliers.
The MD said, “but the middlemen who have money to pay and buy large quantity would end up getting some discounts from depots. They then go back to these retailers and charge huge credit from these surface tanks owners and they end up hiking the price enormously. So because the surface tanks owners are getting it from bulk buyers/middlemen on credit, they have no option than to accept it.
“So, you find a situation where a depot that sells a litre of kerosene, for instance, at N135 to middlemen would end up selling it at N200 to these surface tanks owners who in turn would add N5 or N10 to make profit, thereby selling to end users at N210. So as government price increases, so also do retailers increase to remain in the market. This has been the case in the last two years.
“I, therefore, suggest that govt should create a platform where microfinance banks come into the picture and take the position of these middlemen, who buy product and supply on credit at exorbitant rate to surface tanks owners.
“By empowering microfinance banks to fill up the gap, they would have ended up doing one of their lines’ businesses, which is to provide opportunity for people at micro level do businesses.
“Besides, they would act as a bridge between the supplier and the end user, thereby ensuring that the right pricing gets to them; the price that would not be transferred from the depot to the end user. Probably the microfinance banks would charge the surface tanks owners only transport cost and a little interest since the banks would be giving them some credit for some time.”
He, however, advised that the Department of Petroleum Resources (DPR) should regulate the microfinance banks to ensure that these surface tanks owners are actually authentic.
He commended NNPC for trying to ensure that out of 10 million litres of kerosene consumed locally daily, it bridges it by five million litres while the other five million litres is imported.
Also speaking, the Executive Director of Ifafon Oil Ltd, Mr. Ignatius Edema, said the committee should come up with recommendation on how best to finance the importation of the product as exchange rate is very high that nobody would import a product at high price and sell at a loss.
He said the world is going biodiesel so the Nigerian oil industry should not be left behind.
Responding, the Chairman of House of Representatives Committee on Petroleum Resources (Downstream), Dr. Joseph Akinlaja, commended them for safety measures and suggestions on how to make kerosene affordable, unadulterated and manageable, especially intervening through the microfinance banks on the product distribution.
Akinlaja said, “we came here to assess and see how kerosene can be affordable to all at high quality and low price. We commend the depots for their planned investment in hydro-carbon because the future of Nigeria depends on gas. Well, CFTZ is an asset to Nigeria’s economic development.
“We have come to know why kerosene is expensive and also to ask the players in the industry – those in supply and distribution – what way forward is. We have identified a whole lot of problems ranging from haulage, distribution to surface tanks issues and we want to see how these challenges can be reduced to a minimal level.”